How Aussie farmers are navigating fuel and fertiliser pressures

As producers grapple with those pressures, many believe the longer-term answer lies in reshaping how farms run - using ag-tech, automation and selective electrification to reduce fuel dependence, lift productivity and build resilience.

Virtual fencing, in-paddock weighing, and robotic and solar-powered systems are viewed as part of a longer-term shift that could make farms less reliant on fuel, less exposed to labour pressure and better placed to manage future shocks.

That was one thread running through conversations at Cultivate, CommBank’s agri event bringing together next-generation producers with experienced agribusiness owners, operators and innovators to discuss the biggest issues facing Australian farmers right now.

Fuel is the immediate pressure point 

Australia’s agriculture sector is deeply tied to diesel. A NSW Department of Primary Industries report found Australian agriculture used 2,225 megalitres of diesel in 2019, accounting for more than 80 per cent of agricultural energy use nationally.

“Whether you're a cropping operation or a cattle operation, you need diesel for your business to survive,” said CommBank Agriculture & sustainable economist Dennis Voznesenski.

For Spring Ridge mixed farmer David Brownhill, the first priority is harvest.

“We’ve got to have enough fuel to get through that. And then planting is the next step,” he said.

Brownhill said the price shock had already landed. His fuel bill rose 48 per cent in the first weekend after the conflict in Iran began and had since doubled, turning diesel into an operational issue rather than just another input cost.

In the Hunter Valley, Springhill Beef producer Adam Turner said diesel and fertiliser were adding to pressure in an already mixed season.

“Obviously diesel and fertiliser costs at the minute are through the roof,” he said.

Turner said there was no single issue causing alarm, but he described a “sort of unease.”

For cattle producers in some regions, weather is adding another layer of uncertainty. Longreach cattle producer Evangeline Fysh, from Fysh Cattle Co., said recent high rainfall had cut roads, making it harder at times to get to fuel depots – adding to the difficulty of accessing crucial fuel.

Voznesenski said he’s been hearing similar stories from around the country, including Western Australian farmers having to refuel contractors delivering fertiliser because there was nowhere for them to fill up on the way back, and other producers receiving only part of fuel orders placed before the Iran conflict began. 

Innovation as part of the response

Australian farmers may be years away from following miners into battery-powered heavy vehicles, but the current fuel squeeze is putting a more immediate question on the table: what equipment on the land can move off diesel now?  
 
This question is sharpening an already rising adoption of ag-tech and electrification - not as a complete answer to diesel dependence, but as a way to cut unnecessary travel, reduce labour and move some systems off fuel where it makes economic sense.

Halter’s Ethan Brien said virtual fencing was part of that shift. Halter uses technology to move cattle without requiring physical herding or permanent fences in every paddock.

“We need to ask how we can use tech to mitigate the amount of fuel that we are using, whether that’s your on-farm usage or whether it’s you travelling between blocks,” he said.

Turner said Halter’s innovations are changing how his business runs. Springhill Beef uses the virtual fencing technology, along with remote water monitoring and drones across two farms about 340 kilometres apart, allowing staff to keep track of water, cattle and grazing without constantly driving between sites.

Bill Mitchell said innovation gains go beyond fuel. His company, Optiweigh, uses in-paddock weighing systems so livestock can be monitored where they are grazing rather than repeatedly being brought through the yards.

He said innovation and AI were “absolutely critical” as farmers deal with climate pressure and a long-running cost-price squeeze.

“By using that data and addressing those issues quicker and earlier, we can actually produce more from the same land in the same rainfall,” he said.

At Strathdale Wagyu, Lucy Hamblin said the family’s battery-operated robotic feedlot system runs “totally off grid” thanks to solar power. 

“Anything we can do to make producing food efficient, faster, better because that's our whole objective in life,” Brownhill added.

Fertiliser is a growing risk

While diesel is the most immediate pressure point, Voznesenski said fertiliser will likely be the bigger medium-term risk if disruption persists.

He said about 30 per cent of global urea flows through the Strait of Hormuz, making nitrogen supply a critical watchpoint for cropping businesses later in the season.

“If suddenly a third of the world’s nitrogen isn’t available, what type of impact does that have on crops?” he said, adding “it could be a really severe one on protein content of wheat and on yields.”

Brownhill made the same point from the paddock, saying nitrogen is too central to food production to be treated as a secondary issue.

“Without nitrogen, our global population would probably be 4 billion people. With nitrogen, we can handle 8 billion. It’s as simple as that,” he said.

If the situation worsens crop choices may change. Voznesenski said he had already heard some farmers may “literally switch from planting nitrogen hungry crops like wheat and maybe move towards something like feed barley”. 

While the consumer impact was limited for now, Voznesenski said the longer this goes on, the more likely it is to impact their grocery shops. 

“From a food perspective at the moment the impact is minimal,” he said. “The bigger question is, what happens six or 12 months down the line when those fertiliser shortages start to bite and you have reduced production globally?”

Farmers finding a way

Despite the growing challenges faced by Australian farmers in this geopolitical climate, farmers are approaching the future with resilience, a character on display throughout Cultivate. 

Evangeline Fysh attributes this to the agriculture sector being “a real problem solving community” that sticks together. 

“We really work together really well and go to our neighbours and other industry professionals and ask for advice,” she said.

“Our focus right now is being there for our customers to ensure their working capital needs are met,” said Kylie Allen, CommBank Executive General Manager, Regional and Agribusiness Banking. “We want to make sure they have specialist support such as commodity and interest‑rate hedging that could help manage risk in the current environment and so they have the confidence and flexibility to navigate the volatility and plan for the season ahead. We want customers to speak with us early about any cash flow concerns.”

For now, that is what many are doing: absorbing the diesel hit in front of them, watching the nitrogen market behind it, and investing in technology that reshapes how farming works.